2018 is the year of the Company Voluntary Arrangement (CVA). There has been a long list of retailers who have succumbed to restructuring procedures, with Mothercare, New Look and Homebase all announcing CVAs in the last year. Perceived as a rescue tactic, the procedure negotiates rent cuts with the landlords and navigates branch closures, allowing the business owners the breathing space to pay back their creditors.
The most recent addition to the list is the stationery chain, Office Outlet. Originally known as Staples, the retailer has been forced to launch a restructuring proposal after a significant decline in footfall at their retail parks. Under the terms of the voluntary arrangement, four stores will be forced to close and cause approximately 44 job losses.
While Office Outlet has insisted “every effort” will be made to redeploy employees from the closing stores, there is no denying the impact this restructuring will have on the business. While perceived as more attractive than insolvency, business owners do not have to subject themselves to either.
Rather than reshaping the business to satisfy creditors’ demands, accepting help from credit managers can provide an injection of cash as well as the safeguards to protect it.